Student aid requests soar as economy plummets

Record numbers of college students are lining up for financial aid - and asking for more of it - as the nation's economic woes hit campuses across the country.

Nationally, 8.9 million students filed federal student aid forms during the first half of 2008, a 16.3 percent increase over the same period.  Read On . . . 

Credit Woes Hit Funding For Loans to Students

That headline is from this Wall Street Journal piece. If you have a student loan-- loan is usually sold off before you ever receive a check. Heck, sometimes it's sold off before you even apply.

Say you, and a million other peeps, take out a student loan. The loan companies only have so much money right? So they need to get more money to make new loans. What the loan companies do is take like a million dollars worth of loans (or some other number) bundle them together and securitize them. Once they are a security, other people and institutions them.

The bank is happy because it now has more money. It can make more loans which it will later securitize so it can get more money and make more loans. It’s the circle of life if you are a bank. The students who took the loans are happy they get to go to college. The peeps who bought the securitized loans are happy because student loans are unbelievably safe. By the time these loans are paid off, and the securities reach maturity, the peeps who own the security will be rolling in dough.

But here is the new problem. No one is buying the bundled loans! Thus far, I have read several pieces and no one is talking about Stafford or Perkins loans --yet.

But I'd keep watching this issue or reading this blog.

That Lump of Coal in Your Stocking?

It's a gift from the President and Congress. Look what I found on Inside Higher Ed while you were being festive. Billions were stripped from the final 2008 spending bill. Guess who's taking the hit?

Favorite Paragraph: "In addition, the budget reconciliation measure provides funds to increase the maximum Pell Grant by $490 in 2008. But to the dismay of college officials, Congressional Democrats, knowing that they had already delivered a significant increase in the program through the back door of mandatory funds, opted to provide only enough in discretionary money to set the maximum grant at $4,241, which represents a decrease from the 2007 level of $4,310, the first such cut in 15 years."

Inside Higher Ed also had a handy chart that shows the amounts of specific cuts.